The taming of Rolf Breuer

A top German banker learns to be nice to hedge funds

WHAT a difference a couple of weeks make. On May 10th Rolf Breuer, supervisory-board chairman of Deutsche Bank, Germany's biggest bank, and of Deutsche Börse, an exchange group that runs the Frankfurt stock exchange, had nothing good to say about hedge funds. That was a day after pressure by one of them, The Children's Investment Fund (TCI), based in London and owner of 8% of Deutsche Börse's shares, had forced him to fire Werner Seifert, the company's chief executive, and announce that he would depart himself by the end of the year.

“It is dangerous when hedge funds lord it over everyone and force their views on the majority of stability-oriented investors,” he told Capital, a monthly magazine. Germany should seriously consider stricter legislation against hedge funds, he urged.

That was then. On May 25th, at Deutsche Börse's keenly anticipated AGM, Mr Breuer went out of his way to be nice to these alternative investors: “For Deutsche Börse, hedge funds are a very important group of clients,” he said. A German law could have no impact on offshore hedge funds anyway, and it would even be damaging to discuss one. “We see hedge funds as an enrichment of the capital markets: they take risk where no one else dares.”

He could have been parroting the very words of Christopher Hohn, chief investment officer of TCI. In fact he probably was. At a stormy meeting two days earlier Mr Hohn told Mr Breuer that as chairman of an exchange he had no business to be rude about hedge funds, which were among its best clients: it was like an ice-cream salesman saying he hated children, Mr Hohn explained. The two men seem to have reached an understanding. Soon afterwards Mr Hohn announced that, with Mr Breuer already on his way, he would not go ahead with a formal call for his head at the AGM, a motion he had filed on April 14th.